Does a shipping agent withhold tax when buying provisions through a ship chandler?

Only if the paying shipping agent or principal has been specifically designated a BIR Top Withholding Agent (TWA). A TWA buying provisions, fuel, or spare parts as goods through a ship chandler withholds 1% expanded withholding tax under ATC WC158 (corporate chandler) or WI158 (individual chandler), the same TWA goods framework used across this series. A buyer without TWA designation generally withholds nothing on the ad hoc purchase.

What about the chandler's delivery or boarding fee?

A separately billed delivery, boarding, or coordination service fee is a services payment, not a goods purchase, and is generally withheld at 2% under ATC WI120/WC120 — the same general contractor/business-services bracket used elsewhere in this series — distinct from the 1% rate on the provisions themselves.

Is a ship chandler's sale to a foreign vessel VAT-exempt or zero-rated?

Sale of goods, supplies, equipment, and fuel to persons engaged in international shipping or international air transport operations, for use or consumption outside the Philippines, is subject to VAT at 0% under NIRC Section 106(A)(2)(a), as amended, rather than the standard 12% VAT rate — provided the goods are actually loaded aboard the vessel and the shipping line is engaged exclusively in international trade. This is a separate question from the EWT withholding analysis in this guide.

Does withholding apply if the vessel owner pays the chandler directly from abroad?

Philippine EWT withholding generally requires a Philippine withholding agent making the payment. If a foreign vessel owner or principal pays the ship chandler directly from outside the Philippines with no Philippine intermediary involved, there is typically no Philippine withholding agent in the transaction, and the analysis in this guide applies instead to whichever party in the Philippines — usually a local shipping agent — actually disburses the payment.

BIR Form 2307 for Ship Chandlers and Vessel Provisioning Companies

A BIR-designated Top Withholding Agent (TWA) that buys provisions, bunker fuel, or spare parts through a ship chandler withholds 1% expanded withholding tax on that purchase as a goods transaction, under Revenue Regulations (RR) No. 2-98 as restructured by RR No. 11-2018, using ATC WC158 (corporate chandler) or WI158 (individual chandler) — the same TWA goods framework already applied elsewhere in this series. A chandler’s separately billed delivery or boarding service fee is a different kind of payment, withheld instead at the 2% services rate.

This guide is part of the BIR Form 2307 series. It applies the TWA goods-purchase framework from BIR Form 2307 for Purchases of Goods and BIR Form 2307 for Construction Materials and Office Supplies Dealers to vessel provisioning, and distinguishes it from the services rule in BIR Form 2307 for Freight Forwarders and Customs Brokers.

Generate a Vessel Provisioning BIR Form 2307 FREE →

Who withholds on a ship chandler’s supply invoice? #

A ship chandler primarily sells goods — food, water, consumables, deck and engine stores, fuel, and spare parts — to vessels calling at a Philippine port, and goods purchases in this series are withheld only when the buyer has been specifically designated a BIR Top Withholding Agent, not simply because the buyer is a corporation or a shipping business:

“(A) In general, any juridical person, whether or not engaged in trade or business; (B) An individual, with respect to payments made in connection with his trade or business…”
— RR No. 2-98, Section 2.57.3(A)–(B)

As covered in The ‘Regular Supplier’ Rule for BIR Form 2307 and BIR Form 2307 for Purchases of Goods, the 1% goods rate under RR No. 2-98 as restructured by RR No. 11-2018 applies only once the paying shipping agent or principal has received a BIR TWA designation letter. A local shipping agent that is not a TWA, buying provisions through a chandler on an ad hoc basis for a calling vessel, generally withholds nothing on that purchase.

What rate and ATC code apply, and what about VAT? #

The 1% TWA goods rate applies to the provisions and supplies themselves; a chandler’s separate delivery, boarding, or coordination fee is a services payment withheld at 2% instead.

Component	Payee	ATC	Rate
Provisions, fuel, spare parts (goods)	Ship chandler, corporation	WC158	1%
Provisions, fuel, spare parts (goods)	Ship chandler, individual	WI158	1%
Delivery/boarding/coordination service fee	Ship chandler, individual or corporate	WI120 / WC120	2%

This EWT analysis is separate from the chandler’s own output VAT treatment. Goods actually loaded aboard a vessel engaged exclusively in international shipping are zero-rated:

Sale of goods, supplies, equipment and fuel to persons engaged in international shipping or international air transport operations is subject to zero percent (0%) rate, provided that the goods are intended for use or consumption outside of the Philippines.
— summarizing NIRC Section 106(A)(2)(a), as amended

A chandler supplying only domestic inter-island vessels does not qualify for this zero-rating and instead charges standard VAT on its sale, independent of whatever EWT the paying TWA may separately withhold.

Worked example: a TWA shipping agent provisioning a foreign vessel #

Pacific Gateway Shipping Agents, Inc. (fictional), a BIR-designated Top Withholding Agent acting for a foreign principal, buys ₱280,000 worth of provisions and deck stores through Manila Bay Ship Supply Corp. (a corporation) for a vessel engaged exclusively in international trade, plus a separate ₱15,000 boarding and delivery coordination fee.

Item	Amount	ATC	EWT Withheld
Provisions and deck stores (goods)	₱280,000.00	WC158 (1%)	₱2,800.00
Boarding/delivery coordination fee (service)	₱15,000.00	WC120 (2%)	₱300.00

Pacific Gateway withholds ₱2,800 on the goods and ₱300 on the service fee, remits both through BIR Form 0619-E monthly and BIR Form 1601-EQ quarterly, lists Manila Bay Ship Supply Corp. on its Quarterly Alphalist of Payees, and issues a BIR Form 2307 reflecting both ATC codes. Manila Bay Ship Supply Corp., for its part, zero-rates its VAT on the ₱280,000 provisions invoice because the goods were actually loaded aboard a vessel engaged exclusively in international trade — a separate VAT determination that doesn’t change the EWT Pacific Gateway withheld.

Summary #

A ship chandler’s provisions and supplies follow the same 1% TWA goods-purchase framework used elsewhere in this series (ATC WC158/WI158), while a separately billed delivery or boarding service fee draws the 2% general-services rate (WI120/WC120) instead — and either way, a non-TWA buyer generally withholds nothing on the goods portion. The chandler’s own VAT zero-rating under NIRC Section 106(A)(2)(a) for goods loaded aboard an internationally trading vessel is a separate question entirely. See BIR Form 2307 for Purchases of Goods for the general TWA goods rule this guide applies. For the full library of BIR Form 2307 guidance, start at the BIR Form 2307 series hub or the pillar guide.